CSR gaining ground in the global food and drink market

In a bold move, Swiss multinational Nestlé, has just announced a plan worth 500 million Swiss Francs (£312m) for sustainable coffee. Nestlé's plan will cover a number of areas, including responsible farming and sourcing across its global supply chain.

In terms of CSR, Nestlé has hit the jackpot, covering a plethora of different areas of ethical business in one go. The company's decision cannot help but have an impact, given that it buys 10% of the world's supply of green coffee every year (780,000 tonnes).

Part of Nestlé's CSR initiative involves doubling the amount of coffee it buys directly from farmers to 180,000 tonnes over the next five years. In addition to this, 90,000 tonnes of Nescafé coffee will be sourced according to the Rainforest Alliance and Sustainable Agriculture Network (SAN) principles by 2020.

Although the company is to be applauded for its efforts to boost CSR in tangible ways, this is clearly just a start. After all, Nestlé has posted a 5.7% increase in profits for the first half of 2010 (5.5 billion Swiss Francs).

It is fair to say that Nestlé's many forays into CSR, have probably not received the positive attention they may have merited. The company has struggled to position itself as a sustainable responsible brand following scandals associated with baby milk marketing starting in the 1970s.

The fact that Nestlé is partnered by the Rainforest Alliance helps give this CSR initiative credibility. It adds the element of a third party overseer and endorser, which should hopefully mean that Nestlé's claims, will be carefully monitored and verified.

The company is wise, both to seek a respected partner, but also to put so much resource into its CSR activity. Research by the U.S organisation Reputation Institute analysed how important CSR was to a firm's reputation. It conducts annual surveys of companies globally. In its 2008 and 2009 surveys, the most important predictor of reputation is the quality of a company's goods and services (predicting around 18% of its reputation). This is not surprising. What is more surprising is how much weight consumers attach to CSR-related behaviours. In the Reputation Institute's survey, three elements combined, were found to be very important. These were: Citizenship (the company supports good causes and protects the environment; Governance (the company behaves ethical and is transparent in its business operations); and Workplace (it treats its employees well). In total, these three elements predicted 40% of a company's reputation. The Reputation Index found that this translated into 65% of the public 'definitely recommending' the top 20 CSR companies but only 26% doing so for the bottom 20%.

Maybe Nestlé's new plan will help sprinkle some of that reputational gold dust. At any rate, let's hope the Rainforest Alliance's watchful eye will ensure a fruitful CSR initiative, from which everyone benefits.

Photo Credit: Jake Liefer